Commodity trading giant Gunvor has secured a US$1.1bn syndicated borrowing base facility supporting its global LNG operations, in a deal described by the company as a first of its kind for the market.
The facility is structured to support the working capital needs of the Geneva-headquartered company’s LNG activities globally, as well as supporting its derivative positions.
The deal also incorporates ESG requirements, with Gunvor required to report on all CO2 emissions generated by both its own LNG operations and those from associated activities, such as shipping.
A Gunvor spokesperson tells GTR the LNG dedicated facility is the first such deal to be signed by an independent trader. The agreement does not include discounts related to the company’s ESG performance, they add.
The facility was initially launched at US$800mn, and was oversubscribed following strong market appetite, predominantly from banks in Asia, the Middle East and Europe.
Joint bookrunners and mandated lead arrangers (MLAs) on the deal are Rabobank, Natixis and Société Générale. Rabobank also serves as facility and security agent, with Société Générale as documentary agent.
DBS and OCBC are acting as MLAs, while Abu Dhabi Commercial Bank, CA Indosuez, Industrial and Commercial Bank of China, KfW Ipex-Bank and SMBC are lead arrangers on the facility.
Arrangers on the deal include Erste Group Bank, First Abu Dhabi Bank, ING, Mashreqbank, Raiffeisen Bank and Sumitomo Mitsui Trust Bank.
The latest borrowing base facility follows the signing of Gunvor’s first sustainability-linked revolving credit facility (RCF) in mid-November, a US$1.45bn financing line in favour of its Dutch and Swiss operations.
Gunvor has set company-wide targets of cutting scope 1 and 2 emissions by 40% by 2025, and says in a statement that reporting all emissions related to the trading of LNG will add to these commitments.
Other commodity traders have set similar targets, though slashing scope 3 emissions – those generated by associated activities – could prove a trickier prospect for the industry. One of Gunvor’s competitors, Trafigura, says these sources of emissions made up around 77% of its total emissions in 2020.
“We are proud to accompany Gunvor in this landmark transaction,” says Société Générale. “This new LNG borrowing base embodies Gunvor’s long-term strategic move to support transitional commodities that enable the energy transition to a low carbon future.”
“The successful syndication of this facility, which is a first of its kind for LNG trading and coincided with unprecedented volatility in the market, reflects the strong interest of banks to support responsible participants in the growing global LNG market, one of the main enablers of the energy transition,” adds Rabobank.
The use of LNG as a transition fuel has been contested by environmental campaigners, who say all fossil fuels must be cut from the global energy mix. In May, the International Energy Agency called for an immediate halt to investment in new fossil fuel supply projects.